The Bush administration’s Tax Reform Panel says it probably will recommend a cap of either $11,500 or $8,400 per employee per year on employers’ tax exclusion for health benefits expenditures.[@@]
The panel held its final face-to-face meeting Tuesday and is supposed to send U.S. Treasury Secretary John Snow a package of tax reform proposals Nov. 1.
The chairman of the panel, Connie Mack, a former Republican senator from Florida, said panel members had scheduled an Oct. 27 teleconference.
C-SPAN 2 carried a telecast of the Tuesday meeting, but, at press time, the panel had not posted any summaries, let alone any detailed descriptions, of the reform proposals on its Web site, at http://www.taxreformpanel.gov
Panel officials said at the final face-to-face meeting that they would be presenting at least 2 proposals.
One proposal will call for the government to create a “simplified income tax” system that would eliminate many tax breaks, kill the much loathed alternative minimum tax, and reduce the number of tax brackets to 3, from 6.
The other proposal, for a “progressive” consumption tax,” would make sweeping changes to the U.S. tax system.
For families, a progressive consumption tax would be like access to an “unlimited” Roth individual retirement account, which gives taxpayers the ability to avoid paying taxes on capital gains and investment income, according to Liz Ann Saunders, chief investment strategist at Charles Schwab Corp., San Francisco.
If the progressive consumption tax system proposal were adopted, individuals, families and sole proprietors would pay taxes only on wages and would not have to pay taxes on investment income or gains.
Businesses could write off investments on equipment immediately and pay taxes mainly on cash flow.
The simplified income tax proposal would cap the employer exclusion for expenditures on group health benefits to $5,000 for individuals and $11,500 for families, or about the level of expenditures made by the federal government.